ENERGY POLICY:

Lame duck offers glimmer of hope on energy issues

At least one energy measure will see congressional action this week, and a handful of hopeful Senate Democrats have lofty plans to cut through the partisan gridlock of recent months to move several climate and energy bills by year's end.

An alternative vehicles bill (S. 3815) will receive a procedural vote this week, although efforts to pass it could be stifled by politics. Lawmakers will also keep pushing other energy measures including a renewable electricity mandate, an oil-spill response bill and an extension of expiring tax credits, although an already-crowded lame-duck calendar could leave little time to approve them.

Senate Majority Leader Harry Reid (D-Nev.) moved to end debate on the autos bill before the Senate adjourned for recess in September and plans to hold a procedural vote on it Wednesday. Despite some bipartisan support for the measure, it is not likely to find the 60 votes needed to move forward and could face other procedural hurdles even if it does.

The bill would provide tax incentives and loans for the purchase and manufacturing of natural gas vehicles, grants for refueling stations and $100 million for an Energy Department program to accelerate the deployment of plug-in electric vehicles. Although Wednesday's vote could be the Democrats' last chance to pass energy legislation this year, some lawmakers, including Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.), are not giving up.

Bingaman has been pushing Reid to take up several of his top priorities, including a measure that would require utilities to generate 15 percent of their electricity from renewable sources by 2021. Reid has been hesitant to bring that measure to the floor, saying it does not have enough support to pass. But Bingaman remains optimistic.

The two Democrats had a telephone conversation last week to discuss Bingaman's lame-duck legislative priorities, but the outcome of those talks remains uncertain, said Bingaman spokesman Bill Wicker.

Jim Manley, a spokesman for Reid, said, "We haven't made any decisions yet. We are seeing what can get 60 votes."

The renewable electricity standard (RES) measure (S. 3813), which was originally included in the broad energy bill that passed out of the Energy Committee last summer on a bipartisan basis, was once considered a shoo-in as part of a Senate climate bill this year. But those talks failed, so Bingaman and Kansas GOP Sen. Sam Brownback, who is leaving the Senate at the end of this year to become governor, introduced the RES measure as a stand-alone bill this summer.

Since then, they have been working to drum up the 60 votes needed to move it to the floor. So far, 31 additional co-sponsors have signed on, including three Republicans besides Brownback: Sens. Susan Collins of Maine, John Ensign of Nevada and Chuck Grassley of Iowa. A handful of other senators have said they would support the measure without signing on as co-sponsors.

But other Republicans, led by Sen. Lindsey Graham of South Carolina, have floated a clean energy standard bill (S. 20) that would extend the mandate to energy sources like nuclear and "clean coal." The measure could draw supporters away from Bingaman and Brownback's plan, which only allows renewable energy sources under the mandate.

Even if Bingaman and Brownback find 60 supporters, politics of the lame-duck legislative session may keep the measure off the floor. "We do know energy does not top the to-do list," Wicker said.

Spill-response legislation

Bingaman and Gulf state lawmakers from both parties are also hopeful the Senate will move on oil-spill response legislation this month.

The Energy Committee approved a package (S. 3516) this summer that would codify the changes Interior Secretary Ken Salazar made this summer to split the Minerals Management Service into three agencies to separate its leasing, enforcement and revenue collection functions.

It also would increase the safety requirements for drilling wells, establish new research programs, create an independent advisory board for the department, create a fee on companies to pay for inspections, boost the penalties on bad operators and increase the time the department has to carry out reviews before approving exploration plans.

The House cleared oil spill-response legislation this summer, and Reid floated an energy package including spill-response language in July. But the Senate measure was pulled from floor consideration -- along with a Republican alternative -- before lawmakers broke for August recess. Reid then promised to resurrect the measure this fall, but so far, it has gotten little attention.

"That spill bill, Jeff is pretty disappointed and frustrated that we aren't hearing a whole lot more about it," Wicker said. "He thinks legislation needs to be enacted."

Some observers say it is unlikely Democrats will find the political motivation to resurrect the bill this month now that the ruptured BP PLC well in the Gulf of Mexico has been sealed shut.

Much of the controversy over passing oil spill-response legislation centers on unlimited liability language included in Reid's package. Republicans and oil-state Democrats agree the current $75 million liability cap could be raised but are staunchly opposed to eliminating it, saying that would put all but the largest oil companies out of business because of exorbitant insurance costs.

Sen. Mary Landrieu (D-La.) and Mark Begich (D-Alaska) were two of the most vocal opponents of the language, refusing to vote for Reid's package because of it. They have offered their own proposals to address the liability issue. The current $75 million cap is too low, they say, but a compromise could be reached that holds companies accountable without placing a burden on taxpayers and without shutting out smaller companies from operating offshore.

The senators offered up similar proposals addressing liability just before the Senate left for the August recess, and they say they have worked since then to iron out the differences.

Reid and Sen. Robert Menendez (D-N.J.), the author of the unlimited liability language in Reid's bill, have said they are willing to consider compromise liability language.

Tax extenders

A more than $100 billion tax package that could include energy tax extensions is also a strong possibility for consideration during the lame duck. Congress is under pressure to extend popular income tax cuts passed during the George W. Bush administration that are set to expire at the end of the year. The package could be the last chance this session for tax incentives on issues ranging from research and development to ethanol.

President Obama has urged Congress to take up the R&D credit as a way to boost the economy and job creation, and Democratic leaders have not ruled out the idea of taking up the package. Drew Hammill, a spokesman for Speaker Nancy Pelosi (D-Calif.), said late last week that it is "premature at this point" to say what could be included in the tax package.

The House and Senate passed different versions of the tax extenders package earlier this year. Both packages included yearlong extensions retroactive to Jan. 1 for energy and infrastructure tax credits, including credits for energy efficiency, steel industry fuel, biofuels, alternative vehicle fuel and a research and development credit (E&E Daily, June 22).

The tax extension packages were stymied by other measures contained in one or both versions, including provisions for multinational corporations, aid for state programs and an offset provision raising the fee oil producers pay to help increase the coffers of a liability trust fund, which helps to cover economic and natural disaster costs of an oil spill.

Also in contention is a 45-cent tax credit for oil companies that blend ethanol with gasoline, which expires at the end of this year. Extension of the credit is important for Iowa Sens. Tom Harkin (D) and Chuck Grassley (R) and could prove to be a matter of leverage for Democrats looking for a deal with some Republicans to move the income tax cuts.

"We certainly think there is opportunity here in this lame duck they will address the income tax provision that are set to expire and in so doing would open the door for tax extenders," said Matt Hartwig, a spokesman for the Renewable Fuels Association. "I think they will be looking for ways to continue to create jobs and the very least not do anything that would cost jobs. ... If they fail to extend the ethanol tax credits domestic jobs will be lost."

Loan guarantee program

A tax package could also be a vehicle for the White House to transfer stimulus money for the renewable energy loan guarantee program into a different program, as outlined in a White House memo from White House climate adviser Carol Browner, National Economic Council Director Larry Summers and Vice President Joe Biden's chief of staff Ron Klain.

"We also believe you should consider working with Congress to reprogram loan guarantee funds for an extension of the Recovery Act's renewable grant program during the lame duck tax extenders debate," the memo said.

The memo said the program's bureaucratic difficulties and concerns over the renewable loan guarantee credit subsidy funds -- $2.5 billion -- made it a prime target to shift money away; Congress already took $3.5 billion to expand the "cash for clunkers" program and to pay for state aid programs. To protect and use the money more efficiently, it could be better to move the funds into the renewable energy "cash in lieu of grants" 1603 program, the memo said.

"A 2-year extension of the 1603 grant program through the sunset of the associated tax credits has a $2.5 billion tax score. The Administration could work with Congress during the lame duck on the tax extenders bill to reprogram the 1705 funds to pay for the 1603 extensions" or other "clean energy priorities," the memo said.

But Wicker said the White House has reassured Bingaman -- a significant proponent of the renewable energy loan guarantee program -- that it will replace the money for the program and not defund it.

"The White House has assured Chairman Bingaman that it will restore the money it pinched (twice) from this loan guarantee program," Wicker said in an e-mail. "Bingaman takes the administration at its word."

In addition, Bingaman does not support the 1603 program because the tax code should not be used to make grants, although he does support the overall goal of the program, Wicker said.

Spilling into 2011

Bingaman instead would like to take up during the lame-duck session a measure to create a successor program to the troubled Energy Department loan guarantee program. His suggestion to retool the program: create a Clean Energy Deployment Administration to finance the development and deployment of clean energy technologies.

Language to create such a program was included in the committee's broad energy bill (S. 1462) approved last summer.

Bingaman has also pressed Senate leaders to take up legislation that would extend a clean energy manufacturing tax credit. The measure (S. 2857) would extend a credit first included in the economic stimulus bill that allows companies producing solar panels, wind turbines and advanced batteries to write off 30 percent of the cost of creating, expanding or re-equipping manufacturing facilities.

And while the manufacturing tax credit and loan guarantee measures are long shots for consideration this fall, they will likely remain Bingaman priorities in the next Congress, Wicker said.

"Not to put a negative spin on it, but you know my boss, he's pretty consistent. In the event that none of these are successful, it would be safe to conclude those will be his priorities in the 112th," Wicker said.